In terms of Section 26 (5) of the Central Bank of Sri Lanka (CBSL) Act, No. 16 of 2023 (CBA), if the Central Bank fails to meet the inflation target set out in the Monetary Policy Framework Agreement (MPFA) by a margin specified in the same for two consecutive quarters, the Monetary Policy Board is required to submit a report to Parliament through the Finance Minister, which shall also be made available to the public.

The MPFA signed between the Finance Minister and the Central Bank on 3 October 2023, stipulates the inflation target as 5% and specifies the margin for the purpose of Section 26 (5) of the CBA as ±2 percentage points.

Since quarterly headline inflation, as measured by the Colombo Consumer Price Index (CCPI), deviated from the inflation target by more than the margin stipulated in the MPFA, from the lower side for two consecutive quarters in the second and third quarters of 2024, recording 1.4% and 0.8% respectively, the report required under Section 26 (5) of the CBA was submitted to Parliament through the Minister of Finance.

The report was presented to Parliament on 10 January by Prime Minister and Education, Higher Education and Vocational Education Minister Dr. Harini Amarasuriya, and deliberated in detail at the Committee on Public Finance (CoPF) held on 23 January.